Advertisement
Singapore Markets open in 1 hr 14 mins
  • Straits Times Index

    3,144.76
    -38.85 (-1.22%)
     
  • S&P 500

    5,051.41
    -10.41 (-0.21%)
     
  • Dow

    37,798.97
    +63.86 (+0.17%)
     
  • Nasdaq

    15,865.25
    -19.77 (-0.12%)
     
  • BTC-USD

    63,829.21
    +379.62 (+0.60%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,820.36
    -145.17 (-1.82%)
     
  • Gold

    2,400.30
    -7.50 (-0.31%)
     
  • Crude Oil

    85.40
    +0.04 (+0.05%)
     
  • 10-Yr Bond

    4.6590
    +0.0310 (+0.67%)
     
  • Nikkei

    38,471.20
    -761.60 (-1.94%)
     
  • Hang Seng

    16,248.97
    -351.49 (-2.12%)
     
  • FTSE Bursa Malaysia

    1,535.00
    -7.53 (-0.49%)
     
  • Jakarta Composite Index

    7,164.81
    -7,286.88 (-50.42%)
     
  • PSE Index

    6,404.97
    -157.46 (-2.40%)
     

ITUB vs. HDB: Which Stock Is the Better Value Option?

Investors with an interest in Banks - Foreign stocks have likely encountered both Banco Itau (ITUB) and HDFC Bank (HDB). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Banco Itau has a Zacks Rank of #2 (Buy), while HDFC Bank has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ITUB is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

ADVERTISEMENT

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

ITUB currently has a forward P/E ratio of 6.50, while HDB has a forward P/E of 22.17. We also note that ITUB has a PEG ratio of 0.52. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. HDB currently has a PEG ratio of 1.27.

Another notable valuation metric for ITUB is its P/B ratio of 1.29. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, HDB has a P/B of 3.66.

These metrics, and several others, help ITUB earn a Value grade of B, while HDB has been given a Value grade of D.

ITUB has seen stronger estimate revision activity and sports more attractive valuation metrics than HDB, so it seems like value investors will conclude that ITUB is the superior option right now.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Itau Unibanco Holding S.A. (ITUB) : Free Stock Analysis Report

HDFC Bank Limited (HDB) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research